US ex rel. Stone & US v. Rockwell International Corp.
| Decision Date | 24 September 2001 |
| Docket Number | Nos. 99-1351,99-1352,99-1353,s. 99-1351 |
| Citation | 265 F.3d 1157 |
| Parties | (10th Cir. 2001) UNITED STATES OF AMERICA, ex rel. JAMES S. STONE, and UNITED STATES OF AMERICA, Plaintiffs-Appellees and Cross-Appellants, v. ROCKWELL INTERNATIONAL CORP., and BOEING NORTH AMERICAN, INC., Defendants-Appellants and Cross-Appellees. AMERICAN HOSPITAL ASSOCIATION, NATIONAL DEFENSE INDUSTRIAL ASSOCIATION, ELECTRONIC INDUSTRIES ALLIANCE, Amici Curiae |
| Court | U.S. Court of Appeals — Tenth Circuit |
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO (D.C. No. 89-M-1154)
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Christopher J. Koenigs (Michael A. Williams and Michael B. Carroll, with him on the briefs) of Williams, Youle & Koenigs, P.C., Denver, Colorado, for the Appellants/Cross-Appellees Rockwell International Corp. and Boeing North American, Inc. Maria L. Vullo (Robert E. Montgomery, Jr., Matthew Chavez, Jeannie S. Kang, Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York; Hartley D. Alley, Wheat Ridge, Colorado, with her on the briefs) of Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, for Appellee/Cross-Appellant James S. Stone.
Peter R. Maier, Civil Division, Appellate Staff, U.S. Department of Justice, Washington, D.C., (David W. Ogden, Acting Assistant Attorney General, Douglas N. Letter, Civil Division, Appellate Staff, U.S. Department of Justice, Washington, D.C.; Thomas L. Strickland, United States Attorney, Denver, Colorado, with him on the briefs), for the Appellee/Cross-Appellant United States of America.
Herbert L. Fenster, C. Stanley Dees, Mark R. Troy, McKenna & Cuneo, L.L.P., Denver, Colorado; Maureen D. Mudron, American Hospital Association, Washington D.C., filed a brief on behalf of the Amici Curiae, American Hospital Association, National Defense Industrial Association, Electronic Industries Alliance.
Before BRISCOE, HOLLOWAY and POLITZ,* Circuit Judges.
This appeal comes to us from the latest round of litigation arising from environmental violations that occurred during the 1980s at the Rocky Flats nuclear weapons plant ("Rocky Flats"), near Golden, Colorado. Previously, we considered related appeals in United States ex rel. Stone v. Rockwell Int'l Corp., No. 94-634 (10th Cir.); United States v. Rockwell Int'l Corp., No. 96-1530, 124 F.3d 1194 (10th Cir. 1997); United States ex rel. Stone v. Rockwell Int'l Corp., No. 97-1015 (10th Cir.); In re Special Grand Jury, No. 98-1073, 143 F.3d 565 (10th Cir. 1998); United States ex rel. Stone v. Rockwell Int'l Corp., No. 98-1283 (10th Cir.); and United States ex rel. Stone v. Rockwell Int'l Corp., 173 F.3d 757 (10th Cir. 1999). The instant appeal concerns False Claims Act claims, 31 U.S.C. 3729 et seq. (FCA), brought by the Government and James S. Stone, a qui tam relator, against Rockwell International Corporation and Boeing North American, Inc. ("Rockwell"), as well as breach of contract and common law fraud claims brought by the Government alone. After careful consideration, we affirm.
From 1975 through 1989 Rockwell operated the Rocky Flats facility for the Department of Energy ("DOE") under a Management and Operating contract. Under this arrangement, Rockwell was compensated on a "cost-plus" fee basis, whereby Rockwell was reimbursed by DOE for "allowable costs" incurred in operating the plant and, once per year, received a "base fee" calculated at a pre-determined percentage of the overall value of the contract. In addition, the most significant portion of Rockwell's compensation for its management of Rocky Flats came in the form of an "award fee," a bonus paid every six months. The amount of this bonus was based on DOE's evaluation of Rockwell's performance in such areas as general management, production, and (critically for purposes of this appeal) environmental, safety and health operations.
James Stone began working at Rocky Flats as a Principal Engineer in the Facilities, Engineering and Construction Division, on November 10, 1980. He was promoted to the position of Lead Principal Engineer for Rocky Flats' Utility Design Department, Facilities Engineering Division, where he worked until March 1986, when he was laid off.
On June 25, 1987, after he had been laid off by Rockwell, Stone informed Special Agent Jon S. Lipsky of the Federal Bureau of Investigations about environmental crimes that had allegedly occurred at Rocky Flats during Stone's tenure there. Explaining to Agent Lipsky that he had had "unlimited access" at Rocky Flats, Stone related a variety of allegations, including, inter alia, that contrary to public knowledge, Rocky Flats accepted hazardous and nuclear waste from other DOE facilities; that Rockwell employees were "forbidden from discussing any controversies in front of a DOE employee"; that although Rocky Flats' fluid bed incinerators failed testing in 1981, the pilot incinerator remained on line and was used to incinerate wastes daily since 1981, including plutonium wastes which were then sent out for burial; that Rockwell distilled and fractionated various oils and solvents although the wastes were geared for incineration; that Stone believed that the ground water was contaminated from previous waste burial and land application, and that hazardous waste lagoons tended to overflow during and after "a good rain," causing hazardous wastes to be discharged without first being treated. II App. at 457-59.
Using the information he had learned from Stone, Agent Lipsky sought and received a search warrant to search Rocky Flats. III App. at 778-787 (Lipsky Affidavit). Pursuant to this search warrant, on June 6, 1989, seventy five FBI and EPA agents conducted a search of Rocky Flats. Three days after Rocky Flats had been searched, Agent Lipsky's affidavit was unsealed, prompting intense media coverage of the environmental violations alleged therein. See, e.g., Bruce Finley & Thomas Graf, "Rocky Flats illegally burned, dumped waste, U.S. claims," Denver Post, June 10, 1989; Sue Lindsay & Janet Day, "FBI: Flats burned waste secretly," Rocky Mountain News, June 10, 1989.
Availing himself of the qui tam provision of the False Claims Act, 31 U.S.C. 3730(b)(1) ( ), on July 5, 1989 Stone filed the complaint that forms the basis for this appeal. The complaint, filed in camera and under seal, stated an FCA claim alleging that Rockwell, while managing Rocky Flats, concealed environmental, safety, and health problems from DOE throughout the 1980s. I App. at 81. It alleged that from at least as early as November 1980, Rockwell had been legally required to comply with certain federal and state regulations, statutes, laws, and agreements, including, inter alia: DOE Order 5483.1, as superseded by 5483.1A, for Occupational Safety and Health Program for Government-Owned Contractor-Operated facilities; DOE Order 6430.1, the DOE General Design Criteria Manual, and DOE Order 5480.2; Colorado statutes, including Hazardous Substances, Colo. Rev. Stat. 25-5-501 et seq., the Air Quality Control Program, Colo. Rev. Stat. 25-7-101 et seq., Asbestos Control, Colo. Rev. Stat. 25-7-501 et seq., the Colorado Hazardous Waste Act, Colo. Rev. Stat. 25-15-101 et seq., the Water Quality Control Act, Colo. Rev. Stat. 25-8-201 et seq., Radiation Control, Colo. Rev. Stat. 25-11-101 et seq., Hazardous Substance Incidents, Colo. Rev. Stat. 29-22-101 et seq., and other specific provisions defining prohibited acts and reporting requirements with respect to hazardous substances, including, Colo. Rev. Stat. 25-5-503, 25-8-506 & 608, 25-15-08, 309, 310, 29-22-101 & 108; federal statutes, including the Occupational Safety and Health Act, 29 U.S.C. 651 et seq., the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq., the Energy Reorganization Act of 1974, 42 U.S.C. 5801 et seq., the Water Pollution Prevention and Control Act, 33 U.S.C. 1251 et seq., the Clean Air Act, 42 U.S.C. 7401 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., the Safe Drinking Water Act, 42 U.S.C. 300f et seq., and federal regulations applicable or enacted under these statutes. I App. at 87-89.
Stone alleged that Rockwell committed numerous violations of the above stated laws and regulations in connection with its operation of Rocky Flats, and that "[i]n order to induce the government to make payments or approvals," Rockwell violated 3729(a) of the FCA by, inter alia, knowingly presenting or causing to be presented to an officer or employee of the United States government, false and fraudulent claims for payment or approval, including requests or statements for payment, statements for reimbursement of costs, and applications for bonuses in connection with or under the Rockwell-DOE contracts; and knowingly making, using, or causing to be made or used, false records or statements intended to obtain approval and payment of these monies. I App. at 89-90.
In compliance with 3730(b)(2) of the FCA, Stone filed his complaint in camera and provided to the Government a disclosure statement relating "substantially all material evidence and information" related to his claim in his possession. The relevant portions of this Disclosure Statement are discussed in Part II, infra. II App. at 491 (Plaintiff's Confidential Disclosure Statement of Material Evidence and Information). The United States, however, gave notice declining to intervene in the action, though it reserved the right to intervene at a later date upon a showing of good cause. I App. at 114-15.
While Stone's FCA claim was proceeding, in March 1992, in the culmination of a separate criminal investigation into Rockwell's management of Rocky Flats, Rockwell and the United States entered into a plea agreement under which Rockwell pled guilty to...
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